South Africa Competition Commission prosecutes banks for Forex trading collusion

The Competition Commission of South Africa has today referred a Forex manipulation collusion case to the Competition Tribunal which has jurisdiction throughout South Africa and adjudicates competition matters. The Forex collusion case which was first announced back in April of 2015, officially was referred for theĀ prosecution against the following 17 institutions:

  1. Bank of America Merrill Lynch International Limited
  2. BNP Paribas
  3. JP Morgan Chase & Co
  4. JP Morgan Chase Bank N.A
  5. Investec Ltd
  6. Standard New York Securities Inc.
  7. HSBC Bank Plc
  8. Standard Chartered Bank
  9. Credit Suisse Group
  10. Standard Bank of South Africa Ltd
  11. Commerzbank AG
  12. Australia and New Zealand Banking Group Limited
  13. Nomura International Plc.
  14. Macquarie Bank Limited
  15. ABSA Bank Limited (ABSA)
  16. Barclays Capital Inc
  17. Barclays Bank plc

The Commission has been investigating a case of price fixing and market allocation in the trading of forex currency pairs involving the Rand since April 2015.

The Commission found that from at least 2007, the institutions mentioned had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving US Dollar/Rand currency pair.

Further, the Commission found that the respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times.

Traders of the institutions primarily used trading platforms such as the Reuters currency trading platform to carry out their collusive activities. They also used Bloomberg instant messaging
system (chatroom), telephone conversation and had meetings to coordinate their bilateral and multilateral collusive trading activities.

They assisted each other to reach the desired prices by coordinating trading times. They reached agreements to refrain from trading, taking turns in transacting and by either pulling or holding trading activities on the Reuters currency trading platform. They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives.

The Commission is seeking an order from the Tribunal declaring that the institutions have contravene the Competition Act.

Further, the Commission is seeking an order declaring that the Bank of America Merrill Lynch International Limited, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank N.A, Investec Ltd, Standard New York Securities Inc., HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa Ltd, Commerzbank AG; Australia and New Zealand Banking Group Limited, Nomura International Plc., Macquarie Bank Limited are liable for the payment of an administrative penalty equal to 10% of their annual turnover.

Competition Commissioner, Tembinkosi Bonakele stated:

The referral of this matter to the Tribunal marks a key milestone in this case as it now affords the banks an opportunity to answer for themselves.

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